Payers' efforts to drive down hospital prices may be succeeding.
Prices that private and public health insurers paid to acute-care hospitals declined in January, compared with the same month a year ago, the first time they have dropped since the federal government began collecting these data.
In aggregate, the price of hospital acute care for private insurers, Medicare, Medicaid and other payers, including self-pay patients, declined 0.1% last month from January 2014. The new preliminary data, which may be revised, reported a 2.9% drop in Medicare rates for hospital care during that period. Medicaid prices also declined 0.1%. Meanwhile, prices paid by private health plans and other payers grew 1.6%, the slowest rate of growth for any 12-month period since the year that ended in July 1998.
“This appears to be a combination of the public sector pressure, but an even more fierce change on behalf of the private payers,” said Paul Hughes-Cromwick, a senior health economist at the Altarum Institute's Center for Sustainable Health Spending.
“Insurers are more aggressively bargaining with hospitals and more aggressively investing in programs that lower hospital utilization rates,” said Neraj Sood, an associate professor in health economics and policy at the University of Southern California.
The slower rise of hospital spending is one factor that has contributed to slower overall healthcare cost growth. The spending slowdown was pronounced during and after the Great Recession, and has been a welcome relief for states, the federal government and employers. Hospital prices factor significantly into overall healthcare inflation because the sector accounts for roughly one-third of the nation's more than $3 trillion medical bill.